$100-M laundering via banks, casinos probed

THE COUNTRY’S financial regulators are investigating what could be the biggest single money laundering activity ever uncovered in the Philippines—a

total of $100 million that was brought into the country’s banking system, sold to a black market foreign exchange broker, transferred to at least three large local casinos, sold back to the money broker and moved out to overseas accounts, all in a matter of days.

More importantly, the suspected illicit funds are said to be part of funds stolen by computer hackers recently from the accounts of a bank overseas, which INQUIRER sources said was a financial institution in Bangladesh.

“The initial report is that some funds went missing in Bangladesh and the suspicion is that

this bank—or the central bank of that country, itself—was hit by hackers based in China,” said one banking source, relating a story that was corroborated by at least three ranking government officials and four other bankers. “Somehow, those funds found their way into the Philippine financial system.”

This was acknowledged by ranking officials at the Anti-Money Laundering Council (AMLC) who said that an investigation was ongoing as to the ex- tent of the laundering activity, indicating that larger sums and other parties might be uncovered as part of the ongoing probe.

Since learning about the story, the INQUIRER agreed to the request of an AMLC official to hold off on its publication by several days to allow the group to uncover more details about the operation and take the appropriate action against the suspects.

Details gathered by the INQUIRER from several government and banking sources showed that the suspected illicit funds first entered the Philippine financial system through a Makati City branch of Rizal Commercial Banking Corp. through a transaction handled by one of its branch managers with foreign exchange broker Philrem.

Once converted into pesos, the funds were consolidated from five individual bank accounts into a single corporate account of a Chinese-Filipino businessman who runs a “junket operation” flying in high networth gamblers from overseas to play in local casinos.

A ranking RCBC official told the INQUIRER that the bank immediately filed what is called a suspicious transaction report with AMLC once its officials got wind of the activity, thus alerting regulators. This was in addition to an notice sent to the Bangko Sentral ng Pilipinas by its foreign counterpart warning about the illicit funds.

According to banking and gaming industry sources, the funds are owned by a Macau-based client of the junket operator. These funds were used to either “buy chips” or “pay for casino losses” incurred at Solaire Resort and Casino, City of Dreams Manila and Midas Hotel and Casino, the sources said.

“In fact, that client is in town right now and playing at our tables this very moment,” a source at one of the casinos told the INQUIRER last Friday.

Another industry source said the funds were soon moved back to bank accounts overseas. Other local banks mentioned by sources in the course of the probe are Philippine National Bank, which holds the corporate funds of the Chinese-Filipino junket operator, and Banco De Oro Universal Bank, whose only participation, according to an official, was to remit the sum of $1.5 million to a bank account in Hong Kong as part of its regular dealings with Philrem, an accredited remittance partner of the bank. BDO was not cited for any violation by authorities.

“What regulators are now looking at is whether the financial institutions involved followed the knowyour-customer rule in handling these funds,” the source said. “It’s a big amount. Under the law, they were supposed to asked their client where the money came from before accepting it.”

Contacted by the INQUIRER, a ranking AMLC official said the probe of the transaction was ongoing.